I totally agree with your overall conclusion that the article is silly alarmist. However, even government bodies that don't deal with "secret" information house lots of "sensitive" data whose public release would be a big deal. Departments / agencies have lots of confidential and proprietary business information of the private companies they regulate and most agencies have truckloads of personal data belonging to their constituents.

To say that Google Apps, etc is a new and unique threat to it is silly though. At this point between contractors and private infrastructure providers there is little or no government data that is handled only by government employees.

edit: Also, on the federal level one of the big pushes of the new CTO is for GSA to build out its own "cloud" of datacenters with which to host applications and house data for the rest of the executive agencies. While the government might well hire could services from private companies, the goal is to warehouse data inside a government controlled environment.

Yes, seems a bit one sided, Google should be able handle technology advances fast and cheaper than the government. Security, access issues etc, should be spec'ed like everything else in the government.